HEALTH CARE

Justices Focus on Congress’s Taxation Powers

Now confirmed by the Senate, Sonia Sotomayor, her family and friends are gathering at the Supreme Court for her swearing-in as the court's first Hispanic, third woman and 111th justice, in Washington, Saturday, Aug. 8, 2009. Chief Justice John Roberts is scheduled to administer the oath in which Sotomayor would pledge to "administer justice" fairly and impartially, as prescribed by a 220-year-old federal law. (AP Photo/J. Scott Applewhite)
Now confirmed by the Senate, Sonia Sotomayor, her family and friends are gathering at the Supreme Court for her swearing-in as the court's first Hispanic, third woman and 111th justice, in Washington, Saturday, Aug. 8, 2009. Chief Justice John Roberts is scheduled to administer the oath in which Sotomayor would pledge to "administer justice" fairly and impartially, as prescribed by a 220-year-old federal law. (AP Photo/J. Scott Applewhite)
(AP Photo/J. Scott Applewhite)

On Monday, Solicitor General Donald Verrilli told the Supreme Court that the penalty to be imposed on Americans who do not buy health insurance is not a tax. On Tuesday, he will tell the justices that it is.

Day One of the three-day oral-argument hearings was deliberately manufactured by the Court—both the challengers to the validity of the health care law and its government defenders want the Supreme Court to settle the case now. But the Court appointed an outside lawyer, Robert Long of Covington & Burling, to argue that the case cannot be tried yet because the Anti-Injunction Act requires taxpayers to pay a levy first before challenging it.

Most of the justices’ questions seemed to signal that they are inclined to rule on the merits of the case and throw out the possibility that the Anti-Injunction Act would require them to wait until 2015.

Monday’s argument about the constraints imposed under the 19th-century law has the federal government all tied up in knots. The Obama administration, which is keen to see the case decided before November’s elections, has decided that it doesn’t want the old law to stand in the way of the case. That’s why it says the law doesn’t apply here. For the purposes of the Anti-Injunction Act, Verrilli said, the health care law’s penalty cannot be considered a tax.

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But during the oral arguments’ main event on Tuesday, Verrilli will defend the Affordable Care Act’s requirement that nearly every American buy insurance or pay a fine by arguing, in part, that the penalty, while not technically called a “tax,” is a valid exercise of Congress’s taxing power.

Justice Samuel Alito was quick to point out the contradiction: “Today, you are arguing that the penalty is not a tax,” he said. “Tomorrow you are going to be back and you will be arguing that the penalty is a tax.”

But as convoluted as the government’s argument sounds, that doesn’t mean it can’t win on both points. Its combination of arguments on the Anti-Injunction Act, while technical and narrow, seemed to get the most support from the justices. They rained questions down on Long and Gregory Katsas, the challengers’ lawyer.

The government’s theory was attractively narrow: It allows the Court to consider the health care case without compromising the application of the Anti-Injunction Act to other tax laws.

“It’s custom-designed for this case,” said University of Richmond Associate Professor Kevin Walsh, a former law clerk to Justice Antonin Scalia who has been closely watching the case.

The government and the law’s challengers agree that the Anti-Injunction Act shouldn’t apply. They will need to win that argument to get the Court to answer the juicy question being posed on Tuesday: Is the mandate itself constitutional?

On that matter, the government’s apparent about-face on the tax status of the penalty could also work to its advantage. The government will make three legal arguments about why the law is legitimate. It will argue that it’s a permitted use of Congress’s power to regulate commerce between the states. It will argue that it’s a “necessary and proper” component of an otherwise-permissible regulatory scheme. And it will argue that the penalty, which it sees as intertwined with the mandate, is a tax, which Congress is free to impose under its taxing authority. Most discussion has focused on the commerce-clause question, but the justices will consider all three theories to uphold the law.

The government’s goal is to get five or more justices to latch onto any of those theories—which would uphold the mandate even if they don’t all agree. The contradiction on the tax-or-no-tax issue could weaken its taxing-clause argument, said Michael Rosman, the general counsel at the Center for Individual Rights, who argued one of the Court’s blockbuster commerce clause cases in the 2000 United States v. Morrison case, but that may not matter when the final votes are counted.

“Even if you convince one of them that it’s a tax and that person has doubts about whether or not it is a proper exercise of Congress’s power under the commerce clause and the ‘necessary and proper’ clause, then you have a vote,” he said. “You don’t have to win any one of these arguments.”